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Journal of Banking & Finance
Article . 2014 . Peer-reviewed
License: Elsevier TDM
Data sources: Crossref
SSRN Electronic Journal
Article . 2012 . Peer-reviewed
Data sources: Crossref
EconStor
Research . 2012
Data sources: EconStor
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Can European Bank Bailouts Work?

Authors: Dirk Schoenmaker; Arjen Siegmann;

Can European Bank Bailouts Work?

Abstract

Cross-border banking needs cross-border recapitalisation mechanisms. Each mechanism, however, suffers from the financial trilemma, which is that cross-border banking, national financial autonomy and financial stability are incompatible. In this paper, we study the efficiency of different burden-sharing agreements for the recapitalisation of the 30 largest banks in Europe. We consider bank bailouts for these banks in a simulation framework with stochastic country-specific bailout benefits. Among the burden sharing rules, we find that the majority and qualified-majority voting rules come close to the efficiency of a bailout mechanism with a supranational authority. Even a unanimous voting rule works better than home-country bailouts, which are very inefficient. If we assume additional systemic risk benefits, the efficiency of burden sharing rules comes close to the supranational solution.

Country
Netherlands
Keywords

G28, SDG 16 - Peace, Wirkungsanalyse, Financial Stability, Public Good, F33, Bankgeschäft, International Monetary Arrangements, ddc:330, Finanzkrise, SDG 10 - Reduced Inequalities, Justice and Strong Institutions, Internationale Bank, Financial Stability, Public Good, International Monetary Arrangements, International, International, H41, Schuldenübernahme, Europa, Refinanzierung, jel: jel:H41, jel: jel:G28, jel: jel:F33

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    15
    popularity
    This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
    Top 10%
    influence
    This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    Top 10%
    impulse
    This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
    Top 10%
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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
15
Top 10%
Top 10%
Top 10%
bronze